Article 4 Compensation – when can you claim?

 

Compensation? When a local authority brings in an Article 4, you may be entitled to compensation. This is not widely publicised for obvious reasons!

However in certain circumstances, there may be a right for you to claim. This might impact commercial or residential owners who are impacted by a new Article 4.

 

The Landlord’s Guide to Section 108 Compensation Claims

When a Local Authority introduces an Article 4 Direction to block HMOs (House in Multiple Occupation), they are effectively stripping a property of its value. Overnight, a high-yield asset can be downgraded to a standard family home.

Many investors assume that if the Council stops them from making money, the Council must pay for that lost income.

The reality is more complex. While compensation is possible, the “lost rent” argument is one of the most common reasons claims fail. This guide explains how to structure a successful claim, why you generally cannot claim for lost rent, and how the “Diminution in Value” calculation is designed to pay you for that loss in a different way.

 

The Trigger: “Immediate” vs. “Non-Immediate”

 

Before discussing what you can claim, you must establish if you can claim. Compensation is not automatic; it is triggered only under specific conditions defined in Section 108 of the Town and Country Planning Act 1990.

The Council has two ways to introduce an Article 4 Direction:

• Non-Immediate Direction (12+ Months’ Notice): The Council gives notice that the rules will change in one year.

  • Result: No Compensation. You have been given time to act. If you fail to complete your project in that window, the loss is yours.

• Immediate Direction ( or less than 12 Months’ Notice): The Council changes the rules immediately to prevent a “rush” of applications.

  • Result: Compensation is Payable. Because rights were withdrawn without notice, the Council is liable for losses incurred by those who apply for planning permission within 12 months of the direction and are refused.

     

The “Refusal” Requirement: You cannot claim compensation just because the Article 4 exists. You must:

1.  Submit a planning application for the development that was permitted (e.g., C3 to C4 conversion)
2. Receive a formal refusal (or a grant with restrictive conditions)
3. Submit your claim within 12 months of that refusal.

 

 

 

 

The “Double Dipping” Rule: Why You Can’t Claim Lost Rent

 

Section 107(1)(b) of the Act states that a person is entitled to compensation if they have “sustained loss or damage which is directly attributable to the revocation or modification.”

To a layperson, losing £30,000/year in rent seems like “directly attributable loss.” However, the Lands Tribunal and the Courts have established a strict principle against “Double Recovery.”

The Legal Principle

In valuation law, the “Market Value” of an investment property is essentially a calculation of its future income potential, bundled into a capital sum.

• Property A (Family Home): Low income potential = Low Capital Value.

• Property B (HMO): High income potential = High Capital Value.

If the Council pays you the difference in capital value (Diminution in Value) AND the lost rent, they are paying you for the same thing twice.

Relevant Case Law: Hobbs (Quarries) Ltd v Somerset CC [1975]

While this case involved a quarry, the legal principle established is the “Gold Standard” for planning compensation. The court ruled that when rights are withdrawn, the compensation is for the value of the asset (the land with the rights), not the profit of the business that might have been run on that land.

The “Ryeford” Principle: This principle reinforces that you cannot claim for “pure economic loss” (like anticipated profits) for a business that never existed. Since you hadn’t started the HMO yet, the rent is hypothetical. Ryeford Homes Ltd v Sevenoaks District Council [1989]: Confirmed that “hope value” is compensated through land value, not income loss.

Conclusion: You cannot submit a spreadsheet showing “10 years of lost rent @ £30k = £300k claim.” This will be rejected immediately by the District Valuer.

 

Compensation – what are the facts to claim?

 

A claim can be made on an application submitted within 12 months of the immediate (or less than 12 months notice) Article 4 coming into effect. For HMOs, you can see this date here. For other dates, please check with the local authority. Their details can be found here. We have historically seen inaccurate time frames given by local authorities in the past. So we make no apologies in stating the facts here. Although this has improved of late. However despite this, councils will not openly encourage claims for obvious reasons.

This date is defined in Section 108(2) of TCPA 1990 which explicitly states

“…this section applies only if the application referred to in subsection (1)(b) is made before the end of the period of 12 months beginning with the date on which the revocation or amendment came into operation.”

This means that the planning application (not the compensation claim itself) must be submitted within one year of the Direction taking effect.

So take London Borough of Ealing as an example. They announced two Article 4s.

An immediate one which came into effect on 30th October 2024 and a non-immediate Article 4 to come into effect in November 2025.

There is no option to claim against the non-immediate Article 4 as enough notice has been given. However the immediate one in the Perivale area was subject to claims on applications submitted prior to  29th October 2025.

In the case in Perivale a claim may arise if a planning application is refused, which would otherwise be granted as permitted development under Class L of Part 3 of the GPDO or planning permission is granted and is subject to more restrictive conditions that would have otherwise been the case under permitted development (Class L of Part 3 in this case). The same would apply to any other area removing Class L rights for HMOs with immediate effect (or other PD rights).

Importantly you must make a planning application, within 12 months of the immediate Article 4 or less that 12 months notice coming into effect.

A claim for compensation must be made in writing to the local authority and must be served within 12 months of the refusal or restricted approval. Any person having an interest in the land or property, whether that is a freeholder or leaseholder can claim compensation.

 

What can you claim for?

 

1. Abortive Expenditure Money you have essentially “wasted” because the rights were withdrawn. This includes:

• Professional fees (Architects, Surveyors, and yes—Planning Geek fees!).

• Preparation costs for plans and reports (e.g., sound testing) that were commissioned specifically for the HMO conversion.

   

2. Diminution in Value (The big one) This is the drop in the property’s value caused by the restriction. It is calculated as the difference between:

• Value A: The value of the property with the right to convert (often higher due to the potential yield).

• Value B: The value of the property without that right (restricted to C3 use).

 

3. Excessive Compliance Costs If the Council grants permission but forces you to add things that wouldn’t have been required under Permitted Development (e.g., expensive bike stores or specific bin enclosures), the extra cost of these items can be claimed.

 

Important Note on Appeal Costs: You cannot claim the legal costs of fighting the planning appeal in this claim. Those must be claimed separately via a “Costs Application” to the Planning Inspectorate if the Council has behaved unreasonably. Of course if you win the appeal, your compensation goes away bar minor costs. You cannot claim “Diminution in Value” because the property is now worth the higher “HMO value”.

 

Compensation cannot be calculated or claimed until after the planning authority’s decision (which might come many weeks or months after submitting your application).

Whilst the legislation requires the planning application to be submitted within 12 months, the compensation claim itself logically follows the outcome of the planning application, which is refused or granted subject to stricter conditions.

You have 12 months from the decision date of the relevant planning application (the date you know your loss has crystallised) to formally lodge a compensation claim.  This is defined in Regulation 12 of the Town & Country Planning General Regulations 1992. This states that the claim shall be in writing and shall be served on that authority or council by delivering it at the offices of the authority or council, or by sending it by pre-paid post.

This must be served within 12 months from the date of the decision in respect of which the claim or notice is made or given, or such longer period as the Secretary of State may at any time in any particular case allow.

All expenses to be claimed must be evidenced.  This is key.  You will need a professional valuation (usually from a RICS surveyor) to prove the drop in value. The council will likely use the District Valuer to assess your claim, so expect a negotiation.

If you bought the property after the Article 4 was already in force, it is much harder (often impossible) to claim, as you purchased it knowing the restrictions.

These compensation claims can apply to many types of both residential and commercial development  – see below.

 

 

How to claim compensation

 

To successfully claim “abortive expenditure” (wasted costs), you must prove that the money was spent specifically on the development that is now blocked. You cannot simply claim a lump sum; you must provide a “paper trail” that links every penny to the cancelled project.

We have put together a few ideas on the specific documents you need to gather to build a watertight evidence pack.

 

1. The “Paper Trail” of Services

You need to prove that you hired professionals specifically for this HMO conversion.

• Engagement Letters / Contracts: The original emails or signed contracts with your architect, planning consultant (Planning Geek), or surveyor.

  • Why: To prove the scope of work was specifically for a “C4 HMO conversion” and not general maintenance or standard residential upgrades.

• Detailed Invoices: Ask your suppliers for itemized invoices.

  • Warning: A generic invoice saying “For Professional Services: £500” is often rejected. It needs to say: “Preparation of floor plans for 6-person HMO conversion at [Address].”

 

 

2. Proof of Payment

Having an invoice isn’t enough; you must prove the money left your account.

• Bank Statements: Highlight the specific transaction dates.

• Remittance Advice: If you paid via a business account or in batches.

• Dates Matter: The dates of payment (and the dates the work was done) are critical. You are generally claiming for costs incurred before the refusal or before it became clear the project was impossible.

 

 

3. The “Work Product” (Proof the work was done)

You must show that the money wasn’t just paid, but that it produced something which is now useless to you because of the Article 4 direction.

• Architectural Drawings: The floor plans, elevations, or layouts designed for the HMO.

• Surveys & Reports: Sound insulation tests, fire safety risk assessments, or asbestos surveys commissioned specifically for the HMO compliance.

• Building Regulations Applications: If you had already paid fees to Building Control or an Approved Inspector for the conversion works.

 

 

4. Legal & Acquisition Costs (If applicable)

• Legal Fees: If you paid a solicitor specifically to draft ASTs (tenancy agreements) for the HMO or handle HMO licensing applications early, these may be claimable.

• Search Fees: If you conducted specific searches (e.g., HMO register checks) that are now irrelevant.

 

When gathering these documents, apply the “But For” test: “But for the Article 4 direction, would this work still have value?”

• If you fixed a leaky roof, that adds value to the house regardless of whether it’s an HMO or a family home. You likely cannot claim this.

• If you installed fire doors and emergency lighting specifically for HMO compliance, and a family doesn’t need them, this is abortive expenditure.

 

Planning Geek can assist you in claiming – this is an area where the layperson could easily go wrong and miss out on financial compensation. Please reach out to us via our contact section. 

 

 

Local Authorities subject to compensation claims

 

The following Councils are subject to Article 4 compensation claims for HMOs which may be underway, either via purchasing the property or renovating it etc.

Bolton brought in an immediate Article 4 on 13th June 2025 and therefore any application made prior to 12th June 2026 is subject to compensation

Wigan, they failed to give 12 months notice and therefore the claim is valid provided an application is submitted within 12 months of it coming into effect on 31st August 2025 – applications before 30th August 2026

Rossendale introduced an immediate Article 4 blocking HMOs on 19th September. Therefore any application prior to 18th September 2026 is subject to compensation

Halton introduced an immediate Article 4 on 24th September 2025, therefore any application before 23rd September 2026 could be subject to compensation

Chorley introduced an immediate Article 4 on 24th September 2025, therefore any application before 23rd September 2026 could be subject to compensation

Tameside introduced an immediate Article 4 on 2nd October 2025, therefore any application before 1st October 2026 could be subject to compensation

South Tyneside introduced an immediate article 4 for the rest of the borough in areas such as South Shields, Jarrow and Hebburn for HMOs on 19th November 2025. Compensation could be payable on applications submitted prior to 18th November 2026.

Oldham introduced an Article 4 for HMOs from 1st January 2026. Whilst this will be a non-immediate Article 4, it had less than 12 months notice. As a result compensation could be due on any application submitted before 31st December 2026

Dartford have introduced an immediate Article 4 fromm 8th December 2025, affecting the area to the north of the A2.  Compensation could be due for any application submitted before 7th December 2026. The area to the south of the A2 is a non-immediate Article 4 and not affected for compensation.

Wyre Council has introduced an immediate Article 4 blocking HMOs in Fleetwood and Thornton-Cleveleys from 25th February 2026. Any application prior to 24th February 2027 could be subject to compensation.

South Ribble has introduced an immediate Article 4 blocking HMOs from 6th March 2026. Any application for an HMO submitted to South Ribble prior to 5th March 2027 might be subject to compensation.

Swale have decided upon an immediate Article 4 which will be subject to compensation. Whilst the full council approved the new Article 4, another committee will confirm it etc. So at the moment we do not have a date.

Medway have decided upon an immediate Article 4 which will be subject to compensation. This came into effect on 22nd January 2026. Any application for a C4 HMO in Medway will be subject to compensation if submitted prior to 21st January 2027.

Hillingdon introduced an immediate Article 4 on December 11th 2025 which is subject to compensation, except in the wards of Brunel & Uxbridge South which already had an HMO Article 4, although technically as this original Article 4 from 2013 has been cancelled, it can be argued that claims could be possible from these two wards as well. Claims must be submitted before 10th December 2026.

London Borough of Harrow are proposing an immediate Article 4. If this is introduced compensation for any application for  a C4 HMO, could be claimed within 12 months of the directions coming into effect. This is unlikely to happen before early summer. But that timeline can shift forwards or backwards.

Basildon are proposing an immediate Article 4 in the wards of St. Martins & Nethermayne. When this is introduced compensation for any application for  a C4 HMO, could be claimed within 12 months of the directions coming into effect.

See our HMO Article 4 Map page to find out which councils are due compensation and the dates the Article 4 came into effect.

Also Tewkesbury is subject to compensation for the village of Snowshill for the removing of many PD rights for dwellings. This includes porches, fences, gates, painting of houses, velux windows, solar panels and more. The Article 4 for Snowshill took effect on 1st October 2025 and therefore any applications before 30th September 2026 is subject to compensation. The direction can be found here. Please note that the direction does not include a date when it came into effect. But the website says 1st October 2025.

 

 

Appeals

 

If your claim for compensation is refused or disputed by the local planning authority, you may appeal this decision to the Upper Tribunal (Lands Chamber). This tribunal specialises in land valuation and compensation disputes and will consider the validity and amount of compensation. Judicial Review in the High Court is typically used to challenge procedural or legal errors rather than compensation amounts. The claimant would need to show a loss made as a direct result of the Article 4.

The costs of such legal proceedings are also potentially payable by the Council as part of the compensation. Although there is risk on costs here.

• Lodging Fee: To start the case, you pay a court fee of roughly £300 (subject to increases)

• Hearing Fee: If it goes to a final hearing, you pay a fee based on the amount you win (typically 2% of the award, capped at around £16,500).

 

You might be subject to paying the local authority fees if you do not settle or lose.

 

The first part of this is to contact the local authority and ask for a notice of reference to start the process.

 

 

Which permitted development rights are subject to compensation for an Article 4?

 

The following Classes are deemed as prescribed development as far as legislation is concerned (see legislation section below as well)

(a) Part 1 (development within the curtilage of a dwellinghouse);
(b) Classes D, E and G of Part 2 (certain minor operations);
(c) Classes A, AA, C, D, G, J, I, K, JA, L, M, MA, N, O, P, PA, Q, R, S, T and U of Part 3 (certain changes of use);
(d) Classes B, BB, BC, C, CA, D and E of Part 4 (temporary uses);
(da) Classes A and B of Part 6 (agricultural and forestry);
(e) Classes A to H, L, M, MA and N of Part 7 (non-domestic extensions, alterations etc);
(ea) Class B of Part 11 in so far as it relates to a development mentioned in paragraph B.1(d) (demolition of concert halls, venues for live music performance and theatres);
(eb) Class BA of Part 12 (holding of a market by or on behalf of a local authority);
(f) Part 14 (installation of renewable energy equipment);
(g) Class A of Part 16 (development by electronic communications code operators) to the extent that paragraph A.2(5) of Class A disapplies certain conditions in paragraph A.3 of Class A.;
(ga) Class TA of Part 19 (development by the Crown on a closed defence site); and (h) Part 20 (construction of new dwellinghouses); and
(h) Part 20 (construction of new dwellinghouses).

It also applies to permission in principle applications as well which may be blocked via legislation.

 

Summary of process

 

To claim compensation for losses arising from an immediate Article 4 Direction:

1. You must submit a planning application (previously permitted development) within 12 months from the date the Article 4 Direction took effect
2. Compensation only becomes due if your planning application is either refused or granted subject to more stringent conditions or additional costs are involved
3. Once a decision has been issued on your planning application, you then have 12 months from the date of that decision to formally lodge a compensation claim with the local authority in writing

 

Legislation

 

This is defined in Section 107 of the Town & Country Planning Act 1990 (as amended) and Section 108 of the Town & Country Planning Act 1990 (as amended) and finally the Town and Country Planning (Compensation) (England) Regulations 2015

The links above go to the current legislation, however we have created a PDF of Section 107 and Section 108 as of the latest update which might be easier to read. Please note that the Compensation Regulations file is (at the time of writing) out of date on the Government site!  However this mostly relates to the various Classes for which you can claim compensation. We have listed the latest ones above.

Section 107(1) of TCPA 1990 states compensation is payable when:

“planning permission… is revoked or modified… then if, on a claim made to the local planning authority within the prescribed time and in the prescribed manner…”

This section refers explicitly to the claim for compensation itself, but the Act does not specify the exact timeframe explicitly here.

This date is defined in Section 108(2) of TCPA 1990 which explicitly states

“…this section applies only if the application referred to in subsection (1)(b) is made before the end of the period of 12 months beginning with the date on which the revocation or amendment came into operation.”

Critically, this confirms that the application must be made within 12 months.

The period for claiming compensation is 12 months as defined in Regulation 12 of the Town & Country Planning General Regulations 1992.

12.—(1) A claim for compensation made to a local planning authority under section 107 (including section 107 as applied by section 108), ….. shall be in writing and shall be served on that authority or council by delivering it at the offices of the authority or council, or by sending it by pre-paid post.

(2) The time within which any such claim or notice as is mentioned in paragraph (1) is served shall be 12 months from the date of the decision in respect of which the claim or notice is made or given, or such longer period as the Secretary of State may at any time in any particular case allow.

 

 

Disclaimer

This article provides a general overview of planning compensation principles and does not constitute legal or valuation advice. Compensation claims are complex and often require specialist input from a Chartered Surveyor and a Planning Solicitor.

Whilst we are confident of what we right, please note that the information on this page is our interpretation of the legislation and is subject to errors. You will need to apply in accordance with the legislation. Legislation is also updated from time to time, so please ensure that you are reading the latest version.

Always check to ensure that our understanding of the legislation is correct. Planning Geek can’t be held responsible for any typos or mistakes. But we are confident of the information published! If we have made an error, please let us know.

 

Article 4 compensation – Page updated 6th March 2026